What type of investments are defined as being intended to be held until maturity?

Held-to-maturity securities are investments that an entity intends to hold until their maturity date, making them a specific category of financial instruments. This classification applies primarily to debt securities, such as bonds, that have a fixed maturity date and yield fixed interest payments. The reason these securities are categorized this way is due to the investor's intent to retain them rather than sell them in the marketplace before maturity.

The accounting treatment for held-to-maturity securities differs from other classifications. For example, they are recorded at amortized cost rather than fair value, which influences how changes in market interest rates affect the financial statements. By holding these securities to maturity, the investor expects to receive the principal amount at the end of the term, along with any interest payments, thus stabilizing expected cash flows.

Other types of securities, such as trading securities and available-for-sale securities, are not intended to be held until maturity, which affects both reporting and valuation. Trading securities are meant for short-term profit through market transactions, while available-for-sale securities are those that may be sold in the future but are not actively traded. Non-investment securities, although not a standard term in accounting, typically refer to assets that do not represent investments in financial instruments.